Yes perhaps you are correct. Buffett had a very deep value slant for decades. Not sure if the changes are with him or those managing the money. Lately he seems more of a front man.
Yes perhaps you are correct. Buffett had a very deep value slant for decades. Not sure if the changes are with him or those managing the money. Lately he seems more of a front man.
Ghost of Igloi wrote:
sad,
Not really, you and your clones are poor at debate. I love messing with you.
Igy
It's not a debate, you're simply wrong. You can't beat an index fund over the long term, you never have and you never will. Add in the fees that you charge your ignorant clients and the picture gets even worse. You will never admit this for the obvious reason that your entire business model relies on convincing people to believe something that is demonstrably not true.
There is no 'question'. Buffett has long understood the superiority of being invested in equities rather than cash. It's a no brainer.
The only thing that doesn't lie on wall street is the tape. Buffett is a tout just like everyone else who says anything about stocks. Smart though he might be-whatever he says to Forbes, or the Wall Street Journal-is calculated to benefit BRK-not the readers. Read "Confessions of a stock speculator." You'll never believe another "analyst's" opinion. Bold moves-up or down- are manipulation-often leveraged with analyst ratings or interviews in the press. Livermore spells out how and why it's done in the last four chapters. What was true in 1920 remains true today.
Ghost of Igloi wrote:
Yes perhaps you are correct. Buffett had a very deep value slant for decades. Not sure if the changes are with him or those managing the money. Lately he seems more of a front man.
You love to distort my position and assume what is not true. But you have to since your only argument is what was, will be. I have said I don't have any argument with the passive investment model, but most will sell at the bottom as they always do. Indexing is so popular it has distorted the market and investors have a perception that the risk is muted. I disagree and with the overweight to the most overvalued stocks, and use as trading vehicles by algorithmic high frequency traders, makes them riskier. Of course if an active manager is overweighting the same overvalued stock and not managing risk the result will be worse. It is just my opinion.
Very little of what you just wrote is true.
Didi wrote:
Very little of what you just wrote is true.
It doesn't matter if you believe it, it only matters that his clients believe it.
I scanned through this entire thread. Per usual LR posters haven't taken the time to ask the necessary follow up questions to properly advise the OP.
First of all, the OP contradicted himself. He gave the OSAA a risk level, but then he as much as said he didn't like that risk level. So what is it? The OP was never really clear.
Also, what are his goals for the Roth? Remember that a nice little advantage of a Roth is that you can take cash out tax free up to the basis of what you put in even as it generates returns tax free. So as an emergency stash of funds its a pretty good place to put money. But of course you want it in low risk investments if that is the purpose. But if one plans to stash money there for decades until they are required to take distributions, then that is another matter.
If one wants to take risks its actually beneficial to just invest outside of an IRA. You can invest in a growth oriented mutual fund, If the risk pays off then you are up. Remember, unrealized gains are not taxed. Furthermore, while Growth funds generally have low dividend yields anyway, taxable dividends are taxed at a low rate. In fact at 0% if you are in the 15% tax bracket thanks to Obama retaining much of the Bush tax cuts. Long term capital gains are also taxed at favorable rates. The key thing is finding a favorable time to cash out and minimize the tax if you end up with a large gain.
I knew somebody who had invested in Apple around 2001. Around 2011 they decided to cash out their $40,000 gain + prinicipal and just traveled the world for a year on that money. They paid no Fed taxes on that gain because they didn't work and had no other income. They were simply taxed at 0% on the long term gains because they were in the 15% tax bracket.
At the same time, if the stocks take a loss, then you can cash out and get up to a $3000/year deduction on your tax return. Effectively its like a free Put option given to you by the Federal government. You cannot claim that loss if it is in an IRA.
Just some things to think about.
Ghost of Igloi wrote:
"In the first quarter, 52% of active equity managers outperformed their benchmarks, according to Morgan Stanley. To compare, roughly a third of equity managers had outperformed over the previous two years." --
Translation: passive investors are about to face years of poor performance, driven by over weights in highly valued equities, duped by algorithmic trading that uses retail investors for liquidity.
Sold to you Ms. CFA at a high price.
Overvaluation alone is not enough to drive prices lower over shorter segments of the market cycle.
Agreed, but seeing we are currently in the second longest Bull Market more likely at the later stages. Also, the median valuation of stocks is actually higher than the Tech Bubble, which marked the end of the longest Bull Market.
So it would appear that it's not enough over longer segments too.
130 years of market history says you are wrong:
"That’s also why the S&P 500 has averaged total returns of just 4.7% annually over the past 17 years, despite an advance to the second most offensive valuation extreme in history. Without yet another bubble 17 years from now, the coming 17 years are likely to feature even lower average S&P 500 total returns (we’d presently estimate about 3% annually on that horizon)."
--John Hussman, Weekly Commentary 6/12/2017
You don't consider 8+ years to be a long segment in this market cycle?
Ghost of Igloi wrote:
130 years of market history says you are wrong:
"That’s also why the S&P 500 has averaged total returns of just 4.7% annually over the past 17 years, despite an advance to the second most offensive valuation extreme in history. Without yet another bubble 17 years from now, the coming 17 years are likely to feature even lower average S&P 500 total returns (we’d presently estimate about 3% annually on that horizon)."
--John Hussman, Weekly Commentary 6/12/2017
This supports John's point that valuations don't matter over a long segment.
No, but perhaps you assume tomorrow looks like the last eight years. If so, that would be a mistake. As I pointed out the longest Bull Market led to the Tech Bubble where the NASDAQ dropped 83% and the S&P 500 54%. The median stock valuation is much higher than 2000.
Jiminy wrote:
Ghost of Igloi wrote:130 years of market history says you are wrong:
"That’s also why the S&P 500 has averaged total returns of just 4.7% annually over the past 17 years, despite an advance to the second most offensive valuation extreme in history. Without yet another bubble 17 years from now, the coming 17 years are likely to feature even lower average S&P 500 total returns (we’d presently estimate about 3% annually on that horizon)."
--John Hussman, Weekly Commentary 6/12/2017
This supports John's point that valuations don't matter over a long segment.
It was actually Ghost who pointed out that valuations haven't negatively affected prices in the long term.
Ghost of Igloi wrote:
No, but perhaps you assume tomorrow looks like the last eight years. If so, that would be a mistake. As I pointed out the longest Bull Market led to the Tech Bubble where the NASDAQ dropped 83% and the S&P 500 54%. The median stock valuation is much higher than 2000.
We seem to agree that high valuations have not negatively affected prices in the short term or long term.
"It was actually Ghost who pointed out that valuations haven't negatively affected prices in the long term."
John it will work out just fine if you plan to live 130 years. On the other hand if you plan to retire over the next several years you may want to consider lowering your equity exposure dramatically.
That's fairly standard advice, except maybe for the "dramatically" part. That is certainly open to discussion.
The point we agree on is that high valuations alone do not negatively affect equity prices, in either the short or long term cycle segments. Thanks for the discussion.
You will learn soon enough that is an incorrect assumption.
John Aich wrote:
That's fairly standard advice, except maybe for the "dramatically" part. That is certainly open to discussion.
The point we agree on is that high valuations alone do not negatively affect equity prices, in either the short or long term cycle segments. Thanks for the discussion.